CONNECTICUT LIFE AND HEALTH STUDY GUIDE 2025/2026
QUESTIONS WITH SOLUTIONS GRADED A+
✔✔Third-Party Policy Ownership - ✔✔A policy ownership situation in which the life
insurance policyowner and insured are two different people.
In third-party ownership, the three parties to the contract are: the insurer, the owner,
and the insured
✔✔Premium Receipt - ✔✔Given to the applicant in return for the initial premium, this
item provides interim coverage during underwriting. There are two basic types.
The conditional receipt provides interim coverage only as long as the applicant is found
to be insurable. The binding receipt (also called temporary insurance agreement)
provides coverage regardless of insurability.
✔✔Policy Dividend Options - ✔✔The five different ways in which a participating whole
life policyowner may elect to receive policy dividends.
Policy dividends are not guaranteed, but when they are paid, there are five common
ways the policyowner may elect to receive them:
take the cash
reduce the premium
accumulate at interest
buy paid-up life insurance
buy one-year term insurance
✔✔Right to Examine ("Free Look") Provision - ✔✔his contract provision gives new
policyowners a certain time within which to decide whether to keep the policy or to
return it for a full refund.
The free-look period begins when the policy is delivered to the owner. While 10 days is
the shortest free-look period permitted in any state, some states require a longer free-
look period in certain situations.
✔✔Viatical Settlement - ✔✔An arrangement in which a noninsurance company or group
of investors purchases a life insurance policy from a chronically or terminally ill insured.
Viatical settlements provide chronically or terminally ill insureds a sum of money greater
than their policy's cash value, making it more financially advantageous than simply
surrendering the policy. How much is actually paid depends on factors that include the
estimated life expectancy.
,✔✔Individual Retirement Account (IRA) - ✔✔The basic form of individual retirement
plan available to individuals. These plans are also available to employees within certain
types of small-employer retirement plans.
✔✔Fair Credit Reporting Act (FCRA) - ✔✔This federal law sets forth procedures that
credit reporting companies must follow to ensure confidentiality, accuracy of reporting,
and proper use of credit information.
The FCRA requires insurers that seek a credit report to notify the applicant about the
request within three days. The requestor must disclose what the report will cover and
must notify the applicant that s/he may request a summary of what the requestor
learned in the credit report. The summary must be provided within five business days of
the request.
✔✔Immediate Annuity - ✔✔An immediate annuity is purchased only to distribute
guaranteed income. Because immediate annuities are bought with a lump-sum single
premium payment, they are often referred to as a single premium immediate annuities,
or SPIAs.)
✔✔Cash Value Withdrawal - ✔✔How a universal life policyowner can access the
policy's cash value for living benefit purposes.
Traditional policy loans are not available with UL insurance. Instead, UL policyowners
who want to access their cash value may do so only through a cash value withdrawal,
which removes money from the cash value and immediately reduces the policy's face
amount by that same amount.
✔✔STOLI (stranger-originated life insurance) - ✔✔A disreputable form of third-party
ownership of life insurance in which an investor(s) arranges for a consumer to buy a life
insurance policy that is then purchased by the investor(s).
✔✔Variable Universal Life Insurance (VUL) - ✔✔This flexible permanent life insurance
combines the premium flexibility of universal life insurance and the investment
opportunity of variable life insurance.
Like variable life, VUL policies invest their premiums in separate (nonguaranteed)
investment accounts. Like universal life, VUL policies feature premium flexibility; the
policy remains in force as long as its cash value covers the monthly insurance
deductions. To sell VUL insurance, a producer must hold both a state life insurance
license and a FINRA securities registration.
✔✔Currently Insured Status (Social Security) - ✔✔This Social Security insured status
makes workers eligible for death benefits only.
,To be considered currently insured, a worker must have 6 quarters of coverage in the
13-quarter period before death. A currently insured worker is not eligible for retirement
or disability benefits.
✔✔Suicide Clause - ✔✔This life insurance policy provision excludes coverage if the
cause of the insured's death within the first two policy years is suicide.
✔✔Equity-Indexed Life Insurance (EIL) - ✔✔This newer form of flexible permanent life
insurance ties the policy's interest rate to a specific equity index (such as the S&P 500).
Equity-indexed life insurance can be one of two basic forms:
universal life, where the premium payments are flexible
whole life, where the premium payments are fixed
Although the interest rate is derived through a stock index, EIL is regulated as a fixed
interest product.
✔✔Cash Value Loan - ✔✔The basic way in which the owner of a whole life insurance
policy may access the policy's cash value while the insured is alive.
Cash values loans are loans from the insurer, which uses the cash value as loan
collateral. With traditional whole life, the entire cash surrender value (less any prior
policy debt) may be borrowed. With variable life insurance, loans are usually limited to
90% or less of the cash value.
✔✔Rollover IRA - ✔✔A form of IRA into which a participant's retirement plan funds are
transferred after the participant leaves the company.
An IRA rollover is the process through which retirement funds are transferred tax free
from one IRA to another. Rollover IRAs have no contribution limit. Strict rules govern the
transfer, including the need to complete the transaction within 60 days of distribution.
✔✔Guaranteed Minimum Withdrawal Benefit (GMWB) - ✔✔A variable annuity rider that
guarantees that the owner can withdraw a minimum amount annually without a
surrender charge.
Annual withdrawals are usually limited to a specified percentage, such as 5 to 10
percent, of total premiums paid.
✔✔Indexed Whole Life - ✔✔A form of whole life insurance that ties its death benefit and
premiums to changes in a specified index, most commonly the consumer price index
(CPI).
An indexed whole life policy's face amount increases automatically with CPI increases.
Insurers use one of two common pricing methods to cover face amount increases:
The premium increases with each increase in the face amount.
The premium remains level but is higher at policy issue than the first method.
, ✔✔Endowment Policy - ✔✔A form of life insurance that matures ("endows") at an age
younger than age 120, typically age 65, and pays the policy face amount if the insured
is alive at that age.
✔✔Beneficiary - ✔✔In life insurance, this is a person or entity identified as an intended
recipient of the policy's death benefit.
✔✔Nonforfeiture Options - ✔✔The different ways a policyowner can receive a whole life
insurance policy's cash value upon policy surrender.
There are three standard life insurance nonforfeiture options:
cash surrender option (lump sum cash payment)
extended term insurance option (coverage continues for a limited time as term
insurance with the same face amount)
reduced paid-up insurance option (reduced permanent coverage becomes fully paid up)
✔✔Field Underwriting - ✔✔Refers to the activities producers undertake when
completing insurance applications. These activities provide insurers with additional
information that is important to the underwriting process.
✔✔Increasing Term Life Insurance - ✔✔This form of term life features a death benefit
that rises over time.
The increasing term insurance death benefit increases over the term to a preset amount
or at a preset rate. It is most commonly used as a "cost-of-living increase" rider on a
permanent life insurance policy. The premium normally remains level, though at a
higher level than either level or decreasing term.
✔✔10-Year Certain and Life Annuity Income Option - ✔✔An annuity payment option
that provides guaranteed income for the life of a single annuitant, with payments
guaranteed for 10 years.
✔✔Sources of Underwriting Information - ✔✔These various sources of information
about the applicant help the underwriter assess the applicant's insurance risk.
The primary source of underwriting information is the application and accompanying
agent's report. An APS, inspection report, MIB report and/or medical exam may also be
requested.
✔✔Nonqualified Retirement Plan - ✔✔An employer-sponsored retirement plan that
does not meet the requirements of ERISA and therefore does not qualify for favorable
income tax treatment.
QUESTIONS WITH SOLUTIONS GRADED A+
✔✔Third-Party Policy Ownership - ✔✔A policy ownership situation in which the life
insurance policyowner and insured are two different people.
In third-party ownership, the three parties to the contract are: the insurer, the owner,
and the insured
✔✔Premium Receipt - ✔✔Given to the applicant in return for the initial premium, this
item provides interim coverage during underwriting. There are two basic types.
The conditional receipt provides interim coverage only as long as the applicant is found
to be insurable. The binding receipt (also called temporary insurance agreement)
provides coverage regardless of insurability.
✔✔Policy Dividend Options - ✔✔The five different ways in which a participating whole
life policyowner may elect to receive policy dividends.
Policy dividends are not guaranteed, but when they are paid, there are five common
ways the policyowner may elect to receive them:
take the cash
reduce the premium
accumulate at interest
buy paid-up life insurance
buy one-year term insurance
✔✔Right to Examine ("Free Look") Provision - ✔✔his contract provision gives new
policyowners a certain time within which to decide whether to keep the policy or to
return it for a full refund.
The free-look period begins when the policy is delivered to the owner. While 10 days is
the shortest free-look period permitted in any state, some states require a longer free-
look period in certain situations.
✔✔Viatical Settlement - ✔✔An arrangement in which a noninsurance company or group
of investors purchases a life insurance policy from a chronically or terminally ill insured.
Viatical settlements provide chronically or terminally ill insureds a sum of money greater
than their policy's cash value, making it more financially advantageous than simply
surrendering the policy. How much is actually paid depends on factors that include the
estimated life expectancy.
,✔✔Individual Retirement Account (IRA) - ✔✔The basic form of individual retirement
plan available to individuals. These plans are also available to employees within certain
types of small-employer retirement plans.
✔✔Fair Credit Reporting Act (FCRA) - ✔✔This federal law sets forth procedures that
credit reporting companies must follow to ensure confidentiality, accuracy of reporting,
and proper use of credit information.
The FCRA requires insurers that seek a credit report to notify the applicant about the
request within three days. The requestor must disclose what the report will cover and
must notify the applicant that s/he may request a summary of what the requestor
learned in the credit report. The summary must be provided within five business days of
the request.
✔✔Immediate Annuity - ✔✔An immediate annuity is purchased only to distribute
guaranteed income. Because immediate annuities are bought with a lump-sum single
premium payment, they are often referred to as a single premium immediate annuities,
or SPIAs.)
✔✔Cash Value Withdrawal - ✔✔How a universal life policyowner can access the
policy's cash value for living benefit purposes.
Traditional policy loans are not available with UL insurance. Instead, UL policyowners
who want to access their cash value may do so only through a cash value withdrawal,
which removes money from the cash value and immediately reduces the policy's face
amount by that same amount.
✔✔STOLI (stranger-originated life insurance) - ✔✔A disreputable form of third-party
ownership of life insurance in which an investor(s) arranges for a consumer to buy a life
insurance policy that is then purchased by the investor(s).
✔✔Variable Universal Life Insurance (VUL) - ✔✔This flexible permanent life insurance
combines the premium flexibility of universal life insurance and the investment
opportunity of variable life insurance.
Like variable life, VUL policies invest their premiums in separate (nonguaranteed)
investment accounts. Like universal life, VUL policies feature premium flexibility; the
policy remains in force as long as its cash value covers the monthly insurance
deductions. To sell VUL insurance, a producer must hold both a state life insurance
license and a FINRA securities registration.
✔✔Currently Insured Status (Social Security) - ✔✔This Social Security insured status
makes workers eligible for death benefits only.
,To be considered currently insured, a worker must have 6 quarters of coverage in the
13-quarter period before death. A currently insured worker is not eligible for retirement
or disability benefits.
✔✔Suicide Clause - ✔✔This life insurance policy provision excludes coverage if the
cause of the insured's death within the first two policy years is suicide.
✔✔Equity-Indexed Life Insurance (EIL) - ✔✔This newer form of flexible permanent life
insurance ties the policy's interest rate to a specific equity index (such as the S&P 500).
Equity-indexed life insurance can be one of two basic forms:
universal life, where the premium payments are flexible
whole life, where the premium payments are fixed
Although the interest rate is derived through a stock index, EIL is regulated as a fixed
interest product.
✔✔Cash Value Loan - ✔✔The basic way in which the owner of a whole life insurance
policy may access the policy's cash value while the insured is alive.
Cash values loans are loans from the insurer, which uses the cash value as loan
collateral. With traditional whole life, the entire cash surrender value (less any prior
policy debt) may be borrowed. With variable life insurance, loans are usually limited to
90% or less of the cash value.
✔✔Rollover IRA - ✔✔A form of IRA into which a participant's retirement plan funds are
transferred after the participant leaves the company.
An IRA rollover is the process through which retirement funds are transferred tax free
from one IRA to another. Rollover IRAs have no contribution limit. Strict rules govern the
transfer, including the need to complete the transaction within 60 days of distribution.
✔✔Guaranteed Minimum Withdrawal Benefit (GMWB) - ✔✔A variable annuity rider that
guarantees that the owner can withdraw a minimum amount annually without a
surrender charge.
Annual withdrawals are usually limited to a specified percentage, such as 5 to 10
percent, of total premiums paid.
✔✔Indexed Whole Life - ✔✔A form of whole life insurance that ties its death benefit and
premiums to changes in a specified index, most commonly the consumer price index
(CPI).
An indexed whole life policy's face amount increases automatically with CPI increases.
Insurers use one of two common pricing methods to cover face amount increases:
The premium increases with each increase in the face amount.
The premium remains level but is higher at policy issue than the first method.
, ✔✔Endowment Policy - ✔✔A form of life insurance that matures ("endows") at an age
younger than age 120, typically age 65, and pays the policy face amount if the insured
is alive at that age.
✔✔Beneficiary - ✔✔In life insurance, this is a person or entity identified as an intended
recipient of the policy's death benefit.
✔✔Nonforfeiture Options - ✔✔The different ways a policyowner can receive a whole life
insurance policy's cash value upon policy surrender.
There are three standard life insurance nonforfeiture options:
cash surrender option (lump sum cash payment)
extended term insurance option (coverage continues for a limited time as term
insurance with the same face amount)
reduced paid-up insurance option (reduced permanent coverage becomes fully paid up)
✔✔Field Underwriting - ✔✔Refers to the activities producers undertake when
completing insurance applications. These activities provide insurers with additional
information that is important to the underwriting process.
✔✔Increasing Term Life Insurance - ✔✔This form of term life features a death benefit
that rises over time.
The increasing term insurance death benefit increases over the term to a preset amount
or at a preset rate. It is most commonly used as a "cost-of-living increase" rider on a
permanent life insurance policy. The premium normally remains level, though at a
higher level than either level or decreasing term.
✔✔10-Year Certain and Life Annuity Income Option - ✔✔An annuity payment option
that provides guaranteed income for the life of a single annuitant, with payments
guaranteed for 10 years.
✔✔Sources of Underwriting Information - ✔✔These various sources of information
about the applicant help the underwriter assess the applicant's insurance risk.
The primary source of underwriting information is the application and accompanying
agent's report. An APS, inspection report, MIB report and/or medical exam may also be
requested.
✔✔Nonqualified Retirement Plan - ✔✔An employer-sponsored retirement plan that
does not meet the requirements of ERISA and therefore does not qualify for favorable
income tax treatment.
